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Tobacco Farmers Want Their Due from the Cigarette Settlement

07/15/02

Tobacco farmers feel like the teen-ager who didn't get asked to the prom. After cigarette companies hammered out their proposed $368 billion settlement with the government to protect themselves from smoking-related lawsuits, it seemed everyone got somethi

Manufacturers got immunity from annoying litigation. The federal government got an admission that nicotine is addictive, along with a promise to reduce youth smoking and curtail advertising and sports sponsorships. Forty state attorneys general got the notoriety of whipping the tobacco companies as well as a 25-year payout for public health and smoking-related diseases. Lawyers got gigantic fees.
But farmers, as they view it, got nothing, and could lose a lot as domestic demand declines. Strong exports of raw tobacco and cigarettes still outstrip imports by $5.3 billion. But farmers, worried about imports that hit $1.4 billion last year, want guarantees that companies will buy U.S. tobacco.
Farmers see this interim period before Congress votes on the settlement as a chance to protect themselves.
"We're completely left out of the terms of the settlement," says Kenneth Dasher, a flue-cured tobacco grower from Live Oak, Fla. "They're giving money to NASCAR and pro rodeo and other entities that depend on tobacco company support and sponsorship. But there's no guarantee they'll purchase our tobacco. It's unsettling to me. The manufacturers always talked about family unity and having the farmers with them in their lobbying effort. But when they got to the negotiating table, farmers were not invited."
Soon after the settlement became public, tobacco growers went to work on a proposal to share $7 billion from the settlement. Its basic components:
â€¢ Preserve the tobacco program. Farmers say their supply-controlled quota system is uniquely successful and should be maintained.
â€¢ Income guarantee. Cigarette manufacturers should agree to compensate farmers for lost markets.
â€¢ Rural diversity fund. Established by the manufacturers, this would provide low-interest or no-interest loans to help farmers diversify out of tobacco.
"Consumption is going to be affected tremendously, especially in the first year or two. They signed away everything we worked against and at the same time did nothing to guarantee our income. We have to protect ourselves. We won't support any settlement unless we're included in. We could be at real odds with the companies over the next few months," says Rod Kuegel, who grows 85 acres of burley at Owensboro, Ky., and serves as president of the Burley Tobacco Growers Cooperative Association.
Farmers began courting tobacco-state members of Congress more than ever, urging bloc support of their ideas for the pact. "I'm encouraged that our people in Congress are really into it. I've never seen the passion they're putting into this thing. There seems to be a consensus, and that's what we need," says Bruce Flye, who grows flue-cured at Battleboro, N.C., and is president of the Flue-Cured Tobacco Cooperative Stabilization Corp.
Curiously, some health groups, like the American Heart Association, also are supporting farmers. They say their fight is with the companies, not farmers. They may want to maintain quotas and price supports to keep prices high.
Most farmers say quotas are essential to keep them solvent. There's talk of a government buy-out for farmers choosing to leave the business, but the many small-quota burley holders almost certainly would nix that. Anticipating a market crash, some call for a gradual retirement of quota.
"Everything I have is invested in tobacco," says Jimmy Hill, who grows 600 acres of flue-cured near Kinston, N.C. "I'm 61 years old and since my teens my goal has been to own my allotment, and I now own about a third of what I grow. I have no stock, no insurance, no retirement plan. Everything is tied up in quota. I bought quota heavily the last few years on the premise it was a government-sanctioned legal business. Now all of a sudden I'm looking at what could be a worthless tobacco program."
That's an about-face for a crop that brought prosperity to much of the rural South. "It fed, clothed and educated a lot of people here and paid a lot of taxes. If tobacco is done away with, it'll put a lot of people on welfare," says 71-year-old Gordon Roberts, Greeneville, Tenn., who owns 50 acres of burley quota and rents it on halves. "There's no replacement crop that can match its income."